Rotich in tax measures to improve business environment

By MARGARET WAHITO, NAIROBI, Kenya, Jun 8 – In order to raise revenue to finance part of the Sh2.3trillion budget for 2016-17 as well as improve the business environment, the government has a raft of tax measures in different sectors.

Treasury Cabinet Secretary Henry Rotich has introduced a specific duty rate of $200 (Sh20,000) per Metric Ton on iron and steel products to cushion local manufacturers.

He says there has been an increase of the products especially from regions which if not dealt with, will jeopardise the sector in the country.

“Our iron and steel mills are closing down due to unfair competition from cheaper imported iron and steel products,” he said.

In addition, the government has increased the rate of import duty on aluminium cans from 10 percent to 25 percent to protect local manufacturers.

In the transport sector, Rotich has proposed an increase of the Road Maintenance Levy from Sh12 per litre to Sh18 per litre. In the meantime, the transition period for the imposition of VAT on petroleum products which was to expire in September 2016 has been extended by one year.

Still in the transport sector, Rotich has removed standard excise duty rate on import of all vehicles and instead proposed introduce ad valorem rate of 20 percent based on the value of the vehicle.

In 2015, the government had introduced a standard excise duty of at least Sh200,000 for any car more than three years old.

“This has been perceived to be unfair, inequitable and punitive to importers of vehicles commonly imported by low income earners but beneficial to importers of luxurious vehicles,” he noted.

In the beauty industry, excise duty on cosmetics and beauty products has been introduced at the rate of 10 percent which will take effect beginning July 1, 2016 in line with all other excise duties.

The move, he says, is aimed at streamlining with the business in the East African Community (EAC) where the products are taxed.

“Cosmetics and beauty products are not currently subject to the excise duty. These products are subject to excise duty in some countries in the East African Community. In order to help to move towards the harmonisation of the excise duty regime in the EAC, I propose to introduce excise duty on cosmetics and beauty products at the rate of 10 percent,” Rotich explained.

The new tax measures, according to Rotich are all aimed at promoting growth of industries and employment creation, facilitating infrastructure development, cushioning households’ budget to ease the cost of living as well as promoting private sector growth.

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MARGARET WAHITO Margaret has been a business reporter for the past four years. She holds a Bachelors of Science degree in Communications and Public Relations from Moi University. She also holds a diploma in Film and